2. Experimental Auction Study

3. EXPERIMENTAL Sealed-Bid Auction

4. EXAMPLE My Value My Bid HK$XXX

5. EXPERIMENTAL Sealed-Bid Auction

6. Questions?

7. Ready?

8. Go

9. Price Level = $ 0.00 Please raise your hand if you’re active Japanese Auction

10. Price Level = $ 10.00 Please raise your hand if you’re active Japanese Auction

11. Price Level = $ 20.00 Please raise your hand if you’re active Japanese Auction

12. Price Level = $ 30.00 Please raise your hand if you’re active Japanese Auction

13. At every price level you can raise your hard to indicate that you are active. Otherwise, you abandon the possibility of purchasing the item Auction ends when there is one or no active bidders remaining –If one is left, item is sold at that price –If none is left, item is sold at the previous price to a randomly selected active bidder at that price level

14. Questions?

15. Ready?

16. Go

17. Price Level = $ 0.00 Please raise your hand if you’re active Japanese Auction

18. Price Level = $ 10.00 Please raise your hand if you’re active Japanese Auction

19. Price Level = $ 20.00 Please raise your hand if you’re active Japanese Auction

20. Price Level = $ 30.00 Please raise your hand if you’re active Japanese Auction

21. Price Level = $ 40.00 Please raise your hand if you’re active Japanese Auction

22. Price Level = $ 50.00 Please raise your hand if you’re active Japanese Auction

23. Price Level = $ 60.00 Please raise your hand if you’re active Japanese Auction

24. Price Level = $ 70.00 Please raise your hand if you’re active Japanese Auction

25. Price Level = $ 80.00 Please raise your hand if you’re active Japanese Auction

26. Price Level = $ 90.00 Please raise your hand if you’re active Japanese Auction

27. A Little Theory In the Japanese auction, exiting when price level exceeds your value is the optimal strategy This auction is theoretically efficient –Item sold to the bidder who values it most –No gain from secondary trading In the sealed-bid auction, people generally shade, and the buyer may not value the item most.

28. Summary Science comprises both a theoretical and an experimental side Best practice in engineering incorporates wind- tunnel/test-bed – a natural role for laboratory experiments in business strategy and government policy. Smart market – which is smarter? Japanese or Sealed- bid? Pedagogical tool to complement existing approaches in the teaching of economics, business related disciplines, aid the social and behavioral sciences